Slump hits Bill Gates for small change

PUBLISHED : Monday, 30 May, 2005, 12:00am
UPDATED : Monday, 30 May, 2005, 12:00am

In China's declining A-share market, even Bill Gates, the world's richest man, is losing money and his name is not enough to boost the stock.

In July last year, the Bill & Melinda Gates Foundation, the largest in the US with an endowment of US$27 billion, won a quota of US$100 million under the qualified foreign institutional investor scheme, allowing it to buy A shares, denominated in yuan.

The foundation then spent almost US$2 million to buy shares in three Shanghai-listed companies - one making wigs, one in the water business and the other in textile and textile machinery.

It has not been a financial success and Mr Gates has lost millions of yuan. The Bill Gates fever that catapulted two shares that he bought last summer in Hong Kong did not catch on in Shanghai.

Brokers blame the losses not on Mr Gates picking bad shares but on the deep depression in the market. 'In the A-share market, a good company does not mean a good share,' said Peng Yunliang, an analyst with Shanghai Securities. 'In making his selections, Gates Foundation used the same criteria as elsewhere. But the overall market is so dismal that he lost money.'

The foundation bought 523,501 shares in Nanhai Development, the water company, making it the ninth-biggest shareholder, at 7.8 yuan a share. It closed Friday at 7.61 yuan.

It bought 414,200 shares in wig-maker Henan Rebecca at 11.3 yuan a share. It last closed at 10.2 yuan.

It bought 607,040 shares in Zhejiang Golden Eagle at more than 10 yuan a share, against its current value of 6.8 yuan.

The three companies said that they were delighted with their new investor, although they had had no direct contact with him.

'His investment is a confirmation of our work,' said a spokesman for Zhejiang Golden Eagle. A spokesman for Henan Rebecca said the company welcomed Mr Gates' opinions on its future developments. 'We export 90 per cent of our output, mostly to the US, so he can buy our wigs.'

Last July, the foundation spent $15.66 million for a 7.08 per cent stake in H-share company Beiren Printing and the share price surged 26 per cent on the news. The same happened after its purchase of Ocean Grand Chemical Holdings.

Mr Peng said Hong Kong investors reacted as players in a normal market. 'But investors here have no confidence. For Gates, these investments are an experiment. For him, it is a drop in the ocean.'